EXHIBIT 10.1
SPLIT-DOLLAR LIFE INSURANCE AGREEMENT
THIS AGREEMENT is made and entered into this 24th day of January, 2002, by
and between Occidental Petroleum Corporation, a Delaware corporation, with
principal offices and place of business in the State of California (the
"Corporation"), and Xxxxxx X. xx Xxxxx, an individual residing in the State of
California (the "Employee"), with reference to the following facts:
A. The Employee is employed by the Corporation.
B. The Employee wishes to provide life insurance protection for his
family in the event of his death, in an amount equal to his highest annual
salary from the Corporation, under a policy of life insurance insuring his life
issued by Pacific Life Insurance Company (the "Insurer").
C. The Corporation is willing to pay premiums on such a policy as an
additional employment benefit for the Employee on the terms and conditions
hereinafter set forth.
D. The Corporation shall be and at all times remain the owner of the
policy described in this Agreement and, as such, shall possess all incidents of
ownership in and to such policy in order to secure the repayment of the amounts
that the Corporation will pay toward the premiums on such policy.
NOW, THEREFORE, in consideration of the premises and of the mutual promises
contained herein, the parties hereto agree as follows:
1. PURCHASE OF POLICY. The parties hereto shall take all actions necessary to
apply for and purchase from the Insurer a policy on the life of Employee
with an initial death benefit at least equal to the sum of $607,000 plus
the initial premium paid by the Corporation (the "Policy"). Upon issuance
of the Policy, an Exhibit A containing the policy number and other
information regarding the Policy shall be attached to this Agreement and by
this reference become a part hereof. The Policy shall be subject to the
terms and conditions of this Agreement and of the endorsement to the Policy
filed with the Insurer.
2. OWNERSHIP OF POLICY. The Corporation shall be the sole and absolute owner
of the Policy, and may exercise all ownership rights granted to the owner
thereof by the terms of the Policy, except as may otherwise be provided in
this Agreement.
3. EMPLOYEE'S BENEFIT SCHEDULE; ELECTION OF SETTLEMENT OPTION AND BENEFICIARY.
The Employee shall be entitled to that portion of the death benefit under
the Policy that is equal to the lesser of (a) his highest annual rate of
salary from the Corporation at any time prior to his death or (b) the death
benefit in effect for the year in which his death occurs as provided in the
schedule of benefits contained in Exhibit B attached to this Agreement and
by this reference made a part hereof. The Employee may select the
settlement option for payment of the death benefit provided under the
Policy and the
beneficiary or beneficiaries to receive the portion of Policy proceeds to
which the Employee is entitled hereunder by specifying the same in a
written notice to the Corporation. Upon receipt of such notice, the
Corporation shall execute and deliver to the Insurer the forms necessary to
elect the requested settlement option and to designate the requested
person, persons or entity as the beneficiary or beneficiaries to receive
the portion of the death proceeds of the Policy to which the Employee is
entitled. The parties hereto agree to take all action necessary to cause
the beneficiary designation and settlement election provisions of the
Policy to conform to the provisions of this Agreement. The Corporation
shall not terminate, alter or amend such designation or election without
the express written consent of the Employee.
4. PAYMENT OF PREMIUMS. The Corporation shall pay an annual premium on the
Policy on or before the last day of each "policy year" (as such term is
used in the Policy) in an amount sufficient to maintain a death benefit
that is at least equal to the sum of (a) the maximum death benefit in
effect for the next policy year as provided in the schedule of benefits in
Exhibit B plus (b) the cumulative amount of premiums paid by the
Corporation (including the premium then being paid). Upon request, the
Corporation shall promptly furnish the Employee evidence of timely payment
of such annual premium. The Corporation shall annually furnish the Employee
a statement of the amount of income reportable by the Employee for federal
and state income tax purposes as a result of the insurance protection
provided to Employee under the Policy. The Corporation shall determine the
value of current life insurance protection by using the lower of the PS 58
rates, set forth in Revenue Ruling 55-747, 1955-2 C.B. 228, (or the
corresponding applicable provision of any future Revenue Ruling), or the
Insurer's current published premium rates for annually renewable term
insurance for standard risks. The Employee shall be solely responsible for
paying all applicable income and employment taxes attributable to the life
insurance protection that he receives under the Policy.
5. DESIGNATION OF POLICY BENEFICIARY/ENDORSEMENT. Upon the issuance of the
Policy, the Corporation shall execute a beneficiary designation for and/or
an endorsement to the Policy, under the form used by the Insurer for such
designations, in order to secure the Corporation's recovery of the amount
of the premiums on the Policy paid by the Corporation plus any additional
death benefits to which the Corporation is entitled under Paragraph 8a
hereof. Such beneficiary designation or endorsement shall not be
terminated, altered or amended by the Corporation, without the express
written consent of the Employee. The parties hereto agree to take all
action necessary to cause such beneficiary designation or endorsement to
conform to the provisions of this Agreement.
6. LIMITATIONS ON CORPORATION'S RIGHTS IN POLICY. Except as otherwise provided
herein, the Corporation shall not sell, assign, transfer, surrender or
cancel the Policy or change the beneficiary designation provision thereof,
without, in any such case, the express written consent of the Employee.
7. POLICY LOANS. The Corporation may pledge or assign the Policy, subject to
the terms and conditions of this Agreement, for the sole purpose of
securing a loan from the Insurer or
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from a third party. The amount of such loan, including accumulated interest
thereon, shall not exceed the lesser of (i) the amount of the premiums on
the Policy paid by the Corporation hereunder, or (ii) the cash surrender
value of the Policy (as defined therein) as of the date to which premiums
have been paid. Interest charges on such loan shall be paid by the
Corporation at least annually. If the Corporation so encumbers the Policy,
other than by a policy loan from the Insurer, then, upon the death of the
Employee or upon the election of the Employee hereunder to purchase the
Policy from the Corporation, the Corporation shall promptly take all action
necessary to secure the release or discharge of such encumbrance.
Notwithstanding anything contained herein to the contrary, the Corporation
shall not encumber the Policy in any way that would reduce or impair the
portion of the death benefit to which the Employee is entitled.
8. COLLECTION OF DEATH PROCEEDS.
a. Upon the death of the Employee, the Corporation shall cooperate with
the beneficiary or beneficiaries designated by the Employee to take
whatever action is necessary to collect the death benefit provided
under the Policy; when such benefit has been collected and paid as
provided herein, this Agreement shall thereupon terminate.
b. Upon the death of the Employee, the Corporation shall have the right
to receive a portion of such death benefit equal to the total amount
of the premiums paid by it hereunder, reduced by any indebtedness
against the Policy existing at the death of the Employee (including
any interest due on such indebtedness). The portion of the death
benefit to which the Employee's beneficiary or beneficiaries are
entitled shall be paid directly to the beneficiary or beneficiaries
designated by the Employee or by the Corporation at the direction of
the Employee, in the manner and in the amount or amounts provided in
the beneficiary designation provision of the Policy. In the event that
the total death proceeds under the Policy exceed the sum of the amount
due to the Employee's beneficiary or beneficiaries and the total
amount of premiums paid by the Corporation (reduced by any
indebtedness as provided above), then the Corporation shall be
entitled to such excess death proceeds. The parties hereto agree that
the beneficiary designation provision of the Policy shall conform to
the provisions hereof.
c. Notwithstanding any provision hereof to the contrary, in the event
that, for any reason whatsoever, no death benefit is payable under the
Policy upon the death of the Employee and in lieu thereof the Insurer
refunds all or any part of the premiums paid for the Policy, the
Corporation shall have an unqualified right to receive such premiums
and any additional proceeds.
9. TERMINATION OF THE AGREEMENT DURING THE EMPLOYEE'S LIFETIME.
a. This Agreement shall terminate, during the Employee's lifetime,
without notice, upon the occurrence of the bankruptcy, receivership or
dissolution of the Corporation.
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b. In addition, the Employee may terminate this Agreement, by written
notice to the Corporation. Such termination shall be effective as of
the date of such notice.
c. Notwithstanding anything contained herein to the contrary, the
Corporation may terminate this Agreement at any time on or before
December 31, 2002 by written notice to the employee. Such termination
shall be effective as of the date of such notice.
10. DISPOSITION OF THE POLICY ON TERMINATION OF THE AGREEMENT DURING THE
EMPLOYEE'S LIFETIME.
a. For sixty (60) days after the date of the termination of this
Agreement pursuant to Paragraph 9a hereof, the Employee shall have the
assignable option to purchase the Policy from the Corporation. The
purchase price for the Policy shall be the total amount of the premium
payments made by the Corporation hereunder, less any indebtedness
secured by the Policy which remains outstanding as of the date of such
termination, including interest on such indebtedness. Upon receipt of
such amount, the Corporation shall transfer all of its right, title
and interest in and to the Policy to the Employee or his assignee, by
the execution and delivery of an appropriate instrument of transfer.
b. If the Employee or his assignee fails to exercise such option within
such sixty (60) day period, then the Corporation may enforce its right
to be repaid for the premiums which it paid hereunder by surrendering
or canceling the Policy for its cash surrender value, or it may change
the beneficiary designation provisions of the Policy, naming itself or
any other person or entity as revocable beneficiary thereof, or
exercise any other ownership rights in and to the Policy, without
regard to the provisions hereof.
Thereafter, neither the Employee, his assignee nor their heirs,
assigns or beneficiaries shall have any further interest in and to the
Policy, either under the terms thereof or under this Agreement.
11. INSURER NOT A PARTY. The Insurer shall be fully discharged from its
obligations under the Policy by payment of the Policy death benefit to the
beneficiary or beneficiaries named in the Policy, subject to the terms and
conditions of the Policy. In no event shall the Insurer be considered a
party to this Agreement, or any modification or amendment hereof. No
provision of this Agreement, nor of any modification or amendment hereof,
shall in any way be construed as enlarging, changing, varying or in any
other way affecting the obligations of the Insurer as expressly provided in
the Policy, except insofar as the provisions hereof are made a part of the
Policy by the beneficiary designation executed by the Corporation and filed
with the Insurer in connection with this Agreement.
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12. ASSIGNMENT BY EMPLOYEE. Notwithstanding any provision hereof to the
contrary, the Employee shall have the right to absolutely and irrevocably
assign by gift all of his right, title and interest in and to this
Agreement and to the Policy to an assignee. This right shall be exercisable
by the execution and delivery to the Corporation of a written assignment,
in substantially the form attached hereto as Exhibit C, which by this
reference is made a part hereof. Upon receipt of such written assignment
executed by the Employee and duly accepted by the assignee thereof, the
Corporation shall consent thereto in writing, and shall thereafter treat
the Employee's assignee as the sole owner of all of the Employee's right,
title and interest in and to this Agreement and in and to the Policy.
Thereafter, the Employee shall have no right, title or interest in and to
this Agreement or the Policy, all such rights being vested in and
exercisable only by such assignee.
13. ADDITIONAL INSURANCE. In the event that Employee's salary is increased to
an amount in excess of the maximum death benefit in effect under the
schedule of benefits contained in Exhibit B to this Agreement, the
Corporation will take one of the following actions in its sole discretion:
(a) subject to additional underwriting, pay additional premiums on the
Policy to increase the total death benefit under the Policy to an amount
equal to the sum of the Employee's highest annual rate of salary from the
Corporation plus the cumulative amount of premiums paid by the Corporation
on the Policy, (b) provide supplemental insurance coverage so that the
benefit payable to the Employee's beneficiary or beneficiaries under this
Agreement and the supplemental insurance provide an aggregate death benefit
to the Employee's beneficiary or beneficiaries under the Policy that is
equal to the Employee's highest annual rate of salary from the Corporation,
or (c) upon the Employee's death make a payment from its general assets to
the Employee's beneficiary or beneficiaries under the Policy equal to the
difference between the death benefit provided under this Agreement and the
Policy and the Employee's highest salary from the Corporation. If the
Corporation provides the additional death benefit described herein other
than by increasing the Employee's death benefit under this Agreement and
the Policy, then the Corporation shall gross up the Employee, the
Employee's beneficiary or beneficiaries under the Policy, or the Employee's
estate as the case may be, for any income, employment or estate taxes that
they incur that they would not have incurred if the additional insurance
had been provided under this Agreement and the Policy. For purposes of
determining the amounts of such gross-up payments, the Employee, his
beneficiary or beneficiaries or his estate shall be deemed to pay federal
and state income and estate taxes at the highest applicable marginal rates
for the year in question.
14. NAMED FIDUCIARY, DETERMINATION OF BENEFITS, CLAIMS PROCEDURE AND
ADMINISTRATION.
a. Named Fiduciary. The Corporation is hereby designated as the named
fiduciary under this Agreement. The named fiduciary shall have
authority to control and manage the operation and administration of
this Agreement, and it shall be responsible for establishing and
carrying out a funding policy and method consistent with the
objectives of this Agreement.
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b. Claims Procedure.
i. Claim. A person who believes that he or she is being denied a
benefit to which he or she is entitled under this Agreement
(hereinafter referred to as a "Claimant") may file a written
request for such benefit with the Corporation, setting forth his
or her claim. The request must be addressed to the General
Counsel of the Corporation at its then principal place of
business.
ii. Claim Decision. Upon receipt of a claim, the Corporation shall
advise the Claimant that a reply will be forthcoming within
ninety (90) days and shall, in fact, deliver such reply within
such period. The Corporation may, however, extend the reply
period for an additional ninety (90) days for reasonable cause.
If the claim is denied in whole or in part, the Corporation shall
adopt a written opinion, using language calculated to be
understood by the Claimant, setting forth: (a) the specific
reason or reasons for such denial; (b) the specific reference to
pertinent provisions of this Agreement on which such denial is
based; (c) a description of any additional material or
information necessary for the Claimant to perfect his or her
claim and an explanation why such material or such information is
necessary; (d) appropriate information as to the steps to be
taken if the Claimant wishes to submit the claim for review; and
(e) the time limits for requesting a review under subsection
(iii) and for review under subsection (iv) hereof.
iii. Request for Review. Within sixty (60) days after the receipt by
the Claimant of the written opinion described above, the Claimant
may request in writing that the President of the Corporation
review the determination of the Corporation. Such request must be
addressed to the President of the Corporation, at its then
principal place of business. The Claimant or his or her duly
authorized representative may, but need not, review the pertinent
documents and submit issues and comments in writing for
consideration by the Corporation. If the Claimant does not
request a review of the Corporation's determination by the
President of the Corporation within such sixty (60) day period,
he or she shall be barred and estopped from challenging the
Corporation's determination.
iv. Review of Decision. Within sixty (60) days after the President 's
receipt of a request for review, he or she will review the
Corporation's determination. After considering all materials
presented by the Claimant, the President will render a written
opinion, written in a manner calculated to be understood by the
Claimant, setting forth the specific reasons for the decision and
containing specific references to the pertinent provisions of
this Agreement on which the decision is based. If special
circumstances require that the sixty (60) day time period be
extended, the President will so notify the Claimant and will
render the decision as soon as possible, but
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no later than one hundred twenty (120) days after receipt of the
request for review.
v. Further Legal Action. If the Claimant disagrees with the
President's decision, the Claimant may pursue his or her claim by
appropriate legal action under applicable law.
15. AMENDMENT. This Agreement may not be amended, altered or modified, except
by a written instrument signed by the parties hereto, or their respective
successors or assigns, and may not be otherwise terminated except as
provided herein.
16. BINDING EFFECT. This Agreement shall be binding upon and inure to the
benefit of the Corporation and its successors and assigns, and the
Employee, his successors, assigns, heirs, personal representatives,
executors, administrators and beneficiaries.
17. NOTICES. Any notice, consent or demand required or permitted to be given
under the provisions of this Agreement shall be in writing, and shall be
signed by the party giving or making the same. If such notice, consent or
demand is mailed to a party hereto, it shall be sent by United States
certified mail, postage prepaid, addressed to such party's last known
address as shown on the records of the Corporation. The date of such
mailing shall be deemed the date of notice, consent or demand.
18. GOVERNING LAW. This Agreement, and the rights of the parties hereunder,
shall be governed by and construed in accordance with the laws of the State
of California.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement, in
duplicate, as of the day and year first above written.
OCCIDENTAL PETROLEUM
CORPORATION
By /s/ Xxxxxxx X. Xxxxxx
-------------------------
/s/ Xxxxxx X. xx Xxxxx
---------------------------
XXXXXX X. XX XXXXX
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EXHIBIT A
The following life insurance policy is subject to the attached Split-Dollar Life
Insurance Agreement:
Insurer Pacific Life Insurance Company
Insured Xxxxxx X. xx Xxxxx
Policy Number _________
Date of Issue ___________, 2002
A-1
EXHIBIT B
SCHEDULE OF EMPLOYEE DEATH BENEFITS
POLICY YEAR DEATH BENEFIT
----------- -------------
1 $607,000
2 $637,350
3 and thereafter $669,218
B-1
EXHIBIT C
IRREVOCABLE ASSIGNMENT OF SPLIT-DOLLAR LIFE INSURANCE AGREEMENT
THIS ASSIGNMENT, dated this _____ day of _____________, ______,
WITNESSETH THAT:
WHEREAS, the undersigned (the "Assignor") is the Employee party to that
certain Split-Dollar Life Insurance Agreement (the "Agreement"), dated as of
January ____, 2002, by and between the undersigned and Occidental Petroleum
Corporation (the "Corporation"), which Agreement confers upon the undersigned
certain rights and benefits with regard to one or more policies of insurance
insuring the Assignor's life; and
WHEREAS, pursuant to the provisions of said Agreement, the Assignor
retained the right, exercisable by the execution and delivery to the Corporation
of a written form of assignment, to absolutely and irrevocably assign all of the
Assignor's right, title and interest in and to said Agreement to an assignee;
and
WHEREAS, the Assignor desires to exercise said right;
NOW, THEREFORE, the Assignor, without consideration, and intending to make
a gift, hereby absolutely and irrevocably assigns, gives, grants and transfers
to _________________ , (the "Assignee") all of the Assignor's right, title and
interest in and to the Agreement and said policies of insurance, intending that,
from and after this date, the Agreement be solely between the Corporation and
the Assignee and that hereafter the Assignor shall neither have nor retain any
right, title or interest therein.
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XXXXXX X. XX XXXXX
Assignor
ACCEPTANCE OF ASSIGNMENT
The undersigned Assignee hereby accepts the above assignment of all right,
title and interest of the Assignor therein in and to the Agreement, by and
between such Assignor and the Corporation, and the undersigned hereby agrees to
be bound by all of the terms and conditions of said Agreement, as if the
undersigned had been the original employee party thereto.
------------------------------
----------------------
Assignee
Dated:
--------------------
C-1
CONSENT TO ASSIGNMENT
The undersigned Corporation hereby consents to the foregoing assignment of
all of the right, title and interest of the Assignor in and to the Agreement, by
and between the Assignor and the Corporation, to the Assignee designated
therein. The undersigned Corporation hereby agrees that, from and after the date
hereof, the undersigned Corporation shall look solely to such Assignee for the
performance of all obligations under said Agreement which were heretofore the
responsibility of the Assignor, shall allow all rights and benefits provided
therein to the Assignor to be exercised only by said Assignee, and shall
hereafter treat said Assignee in all respects as if the Assignee had been the
original employee party thereto.
OCCIDENTAL PETROLEUM
CORPORATION
By
----------------------
Dated:
------------------
C-2
